StarHub (CC3) Q3 2024 earnings summary

Executive summary

• Service revenue was flat year-to-date and down quarter-on-quarter due to timing in cybersecurity revenue recognition, but full-year guidance remains unchanged with expected year-on-year growth.

• Net profit after tax increased 11.1% year-on-year in 3Q2024 to $40.4 million and 9.5% in 9M2024 to $123.7 million, marking the seventh consecutive quarter of YoY NPAT growth.

• EBITDA and net profit growth were driven by high-margin enterprise segments, operational efficiencies, and lower depreciation.

• Free cash flow for 9M2024 was $167.2 million, running about 50% higher than net profit, supporting dividends and growth investments.

• Leverage remains low at 1.25x net debt to EBITDA, providing financial flexibility for acquisitions and expansion.

Financial highlights

• 3Q2024 total revenue was $575.2 million (-5.8% YoY); 9M2024: $1,671.7 million (-1.5% YoY).

• Service EBITDA margin for 9M2024 was 22.6%, up 0.9 percentage points year-on-year; 3Q2024 margin was 22.6%.

• Net profit after tax for 3Q2024 was $40.4 million (+11.1% YoY); 9M2024 net profit was $123.7 million (+9.5% YoY).

• Free cash flow for 9M2024 was $167.2 million, or $0.0907 per share.

• Interim dividend of $0.03 declared in August; full-year guidance of $0.06 per share reiterated, with a payout policy of at least 80% of net profit after tax, excluding one-off items.

Outlook and guidance

• Full-year 2024 service revenue is expected to be in line with guidance of 1%-3% growth, despite flat performance year-to-date due to cybersecurity revenue timing.

• DARE+ transformation spend is on track, with $27 million left to be spent in 2025, and expected cost efficiencies to materialize progressively from the second half of 2025 into 2026.

• Commitment to dividend policy and strong cash position maintained, even with upcoming 700 MHz spectrum payments.

• Capex commitment for 3Q2024 was 7.1% of total revenue, below full-year guidance.